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Of the 50 states, 48 require motorists to purchase and maintain an active auto insurance policy to protect both themselves and those on the road around them. The precise mandatory coverage amounts vary by state, but they typically include both bodily injury liability and property damage liability.
In Iowa, for example, motorists must purchase at least $20,000 in bodily injury per person, $40,000 in bodily injury per crash, and $15,000 in property damage per incident. This coverage is designed to protect accident victims who incur damages in a collision for which they were not at fault.
Unfortunately, these mandatory minimum amounts may not be enough to cover all the damages that motorists and their passengers incur in a catastrophic wreck. In addition to the direct costs like damage to the vehicle, ambulance fees, and emergency room expenses, accident victims have to worry about indirect costs like missed work and—in cases involving debilitating injuries—loss of earning capacity. The lifetime costs of living with a spinal cord injury, for example, can amount to millions of dollars.
Motorists can protect themselves from financial devastation following a wreck by purchasing underinsured motorist (UIM) coverage. This protection is designed to help policyholders handle costs that the liable party cannot.
In cases where the liable party cannot cover any costs whatsoever, uninsured motorist (UM) coverage would apply. A UM policy can also help if you are involved in a hit-and-run collision and thus do not know whom the at-fault driver is.
In the state of Iowa, auto insurance providers typically offer policyholders the same minimum UIM/UM coverage amounts as the mandatory liability requirements, or 20/40/15. Although you are not required to purchase a UIM/UM policy by law, you should consider doing so.
If you decide not to purchase uninsured motorist coverage, you have the right to waive it; however, you should add it to your policy as soon as you can afford to do so. If you were to get in a collision with an uninsured motorist, it would cost far more to cover the subsequent expenses out of pocket than to pay a monthly premium.
How Much Uninsured Motorist Coverage Should You Purchase?
Every collision is different, and there is no way to predict what kinds of damages you might incur in a future accident. When it comes to insurance, though, it is always wise to hope for the best but prepare for the worst. Thus, you should purchase as much UIM/UM coverage as you can reasonably afford.
According to the Insurance Information Institute, nearly 9 percent of all licensed drivers in the state of Iowa were uninsured in 2015. The precise figure might vary from year to year, but this percentage illustrates the fact that getting into a wreck with an uninsured motorist on the state’s roads is a very real possibility, making UM coverage a smart investment.
How Can You Keep the Cost of Coverage Down?
If you want to purchase an adequate UIM/UM policy but are concerned about a pricey premium, there are steps you can take to secure the most affordable auto insurance rates possible. For example, you can:
- Take advantage of any applicable discounts that your provider offers;
- Opt for a high deductible;
- Purchase a vehicle with a high safety rating;
- Maintain a clean driving record;
- Seek quotes from multiple providers to find the best deal;
- Bundle policies for homeowners and life insurance with your auto insurance;
- Install a device that tracks driving habits in your vehicle; and
- Complete an approved defensive driving course.
At the end of the day, a lot of factors go into calculating car insurance premiums. Although some of them are in your control, others are not. Fortunately, you can secure an affordable policy that includes both liability and uninsured motorist coverage by taking advantage of the influencers that are in your hands.